Trung tướng Tô Ân Xô, the spokesperson of the Ministry of Public Security, provided information about the FLC – Tân Hoàng Minh case at the regular Government press conference in February 2024 – Photo: VGP/Nhật Bắc
According to Major General Tô Ân Xô, the FLC – Tân Hoàng Minh case has raised a warning bell about market manipulation in the stock market and bond market.
In order to ensure a healthy operation of the stock market, Major General Tô Ân Xô stated that through the investigation process, the investigating authorities have found that FLC’s market manipulation is manifested through 2 behaviors.
The first behavior is fraudulent appropriation. Trần Văn Quyết directed the creation and falsification of capital contribution documents at FLC Faros Construction Joint Stock Company, falsely raising the contribution from 1.5 trillion VND to 4.3 trillion VND. He then legitimized the documents in order to obtain approval for deposit registration from the securities regulatory agency, thereby committing fraud and misappropriating 3.62 trillion VND.
The second behavior is stock market manipulation. Trần Văn Quyết directed the use of personal identities of 45 family members to establish 20 companies that were not engaged in any business activities. He used these legal entities to open 500 stock trading accounts for the purpose of stock market manipulation. The methods of manipulation include continuously buying and selling the same type of securities, trading intra-group orders, placing multiple buy and sell orders during the market opening and closing, and placing and canceling multiple buy and sell orders to create fake supply and demand and deceive investors. From May 26, 2017 to January 10, 2022, this group has used 190 accounts to carry out manipulative activities, illicitly profiting 723 billion VND.
Based on the investigation results, Major General Tô Ân Xô concluded that the following factors contributed to the violations:
Firstly, there were inadequate checks, supervision, and control by the relevant authorities in terms of the contributed capital at businesses (self-declared by organizations and individuals), which resulted in falsification and legitimation of capital.
Secondly, there was a lack of control over the opening of securities trading accounts, making it easy to open multiple accounts under different names.
Thirdly, the sanctions and penalties imposed were lenient and not sufficient to deter violators.
Fourthly, the regulations on state management of auditing quality and individuals’ responsibilities were vague and loosely defined.
Fifthly, the lack of control by social media allowed certain individuals to form closed groups and manipulate and control investors.
Lastly, there were no specific legal regulations and guidelines for determining the damages suffered by investors during periods of market manipulation.
Based on these lessons learned, Major General Tô Ân Xô stated that the relevant authorities have coordinated efforts to address the vulnerabilities, and it is hoped that the Vietnamese stock market will develop in a healthy manner and operate according to market mechanisms in the future.
Major General Tô Ân Xô also sent a message to stock market investors, advising them not to take advantage of these vulnerabilities to manipulate the market. He warned that any individuals or organizations that engage in such activities will be strictly dealt with according to the law in order to ensure the healthy operation of the stock market. This was stated by Major General Tô Ân Xô at the Government press conference in February 2024.
